Google report card: What worked for the company in 2020 and what did not

Gadgets Now Bureau04 Feb, 2021, 08:48AM IST

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Google parent Alphabet reported numbers for the fourth quarter of the year 2020. The company beat estimates and showed green shoots, signaling a comeback after it reported a rare fall in profit during the second quarter of the year. During the quarter, Alphabet disclosed numbers from Google’s cloud business for the first time. Here’s how the company did, what worked, what didn't and the trouble points.

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Worked: Google ad business recovers after reporting decline during second quarter

Alphabet's revenue grew 23% year-on-year in the quarter. This is more than 17% growth reported in Q4-2019. Google's advertising revenue for the fourth quarter came out to $46.20 billion, up 22% from $37.93 billion in the same quarter last year.

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Worked: Google Cloud sales jump 47% year-over-year

Google cloud computing division posted a revenue bump of 47%. This is the first time that the company has released these figures. Google Cloud sales were $3.831 billion, or $13.059 billion for the full year, up 46% from 2019. However, the quarterly operating loss from the business stood at $1.24 billion. CFO Ruth Porat said that the unit will continue hiring in sales and technical roles.

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Worked: Google Cloud business disclosure marks a milestone for the company

The disclosure of cloud computing businesses' numbers marks a major milestone for Google. As for years the company has faced questions of turning a venture profitable other than its advertising business.

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Worked: Revenue from YouTube ads rises 46%

YouTube ads, which brought in $6.89 billion in Q4, jumped 46% from the same quarter last year when it earned $4.72 billion.

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Worked: Retail and other clients made up for spending cuts by travel and entertainment customers

Budget cuts by travel and entertainment advertisers in 2020 were largely nearly made up as the year went on. New spending from retail and other clients compensated for the miss in revenue from these businesses.

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What hurt: Losing share to Amazon and Facebook

Google's lead over the global internet advertising market is shrinking as rivals like Amazon and Facebook make inroads. Both the companies are emerging as threats in online advertising business for Google. Though over a much smaller base, Amazon did witness a jump of 66% in advertising revenue in the fourth quarter of 2020, compared to a 17% for Google search ad revenue. Facebook too saw an increase in ad revenue.

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What hurt: Advantage China for Alibaba

China-focused vendors such as Alibaba enjoyed a faster rebound from the pandemic than Google.

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What hurt: One of the biggest source of search-ad revenue may be drying up

According to the US Justice Department, Google pays Apple up to $12 billion a year to be the default search engine on Apple devices. However, this arrangement is under regulatory scrutiny. There are also reports that Apple is developing its own search engine.

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What hurt: Antitrust battles

Google is fighting antitrust investigations or charges across Australia, Asia, Europe and North America.

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What hurt: May have to quit Australia

Google has threatened to pull its search engine from Australia if the country enforces new rules that would require the company to negotiate fair payments to news publishers to include their content in results.